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All In: Devon Energy is Banking on a Rebound for Anadarko03/08/2022
Devon Energy Corp. intends to take advantage of its position in the Anadarko Basin to drive its cash return model. The company also intends to position itself as the leader for ESG within the industry.
The reason behind this move is simple: top management at Devon believes that the Anadarko Basin is a hidden treasure.
The number of rigs has increased by 180%, and production per rig is up. Technological advancements, longer laterals, and optimized completions are driving this trend. As the company has been in Anadarko all along, Devon will continue planning for the 300,000 net acres that they currently have within this basin, while others only becoming familiar with it at the moment.
Devon is implementing its cash return model when it comes to developing Anadarko Basin, which includes five key components — moderate growth, reduced investment rates, low leverage, fixed-plus-variable dividends, and ESG excellence, which generated $550 million in free cash flow by itself in 2021 alone.
Consequently, the Oklahoma City-based independent E&P company plans to drill 45 new wells in the Midcontinent by 2022, as well as to produce 600,000 boe/d across five operating basins, including the Eagle Ford Shale, Permian, Powder River, and Williston basins.
According to Aaron Ketter, a vice president at Devon Energy, Devon's approach to technology development is long-term. It is based on a consistent allocation of capital. These policies have been in place for decades. Data access, standardization, and trust form the foundations of this system. In line with this, technology teams and field teams, as well as vendor teams, are continually seeking net-zero improvement. Right now, that means using three different sensors to monitor emissions continuously — fixed cameras, a long-range laser network, and aerial laser surveys — to catch any harmful carbon or methane emissions.
Technology advances are bringing about a step change in the transition to observed emissions reporting. Devon will also work with agencies and NGOs in this regard, to conduct research and provide external reports. A preventative phase, methane fees, and carbon tax ensure the company does not become compliant, that any leaks are discovered as soon as possible, that they are fixed quickly, and that compliance is avoided.
However, it remains to be seen whether or not this strategy will produce the necessary results. We should note, however, that Devon Energy, Corp. (DVN) shares have surged 30.7% just this year alone amid recent macro uncertainties and rising energy prices. On both the topline and bottomline, Devon's recent fourth-quarter results were better than Street estimates.
Revenue increased by 233.8% to $4.27 billion, exceeding estimates by $1.04 billion. Earnings per share of $1.39 exceeded consensus by $0.15. Production growth in the Delaware basin and an increase in margins drove this performance. As of the end of the quarter, the company's total production averaged 611 thousand oil-equivalent barrels (Boe) per day.
It appears that they are doing something right, at least for the moment.
And as always, if you wish to learn more about basin development or glimpse some insights about net-zero production, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
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Continental Resources Inc. Invests a Quarter of a Billion Dollars in a Sequestration Project in North Dakota
The investment will happen in the next 2 years. The project intends to capture CO2 from ethanol plants and other sources in Iowa, Nebraska, Minnesota, North Dakota, and South Dakota. Upon aggregation, CO2 will be transported via pipeline to North Dakota, where it will be stored in subsurface geologic formations. The formations will be in the Williston Basin, where Continental Resources has been a dominant producer for more than half a century. At the moment it’s the world's most ambitious carboncapture venture of its kind. The sequestration itself should be underway by spring 2024.
The two Bakken shale producers announced in a joint statement on March 7 that they had reached an agreement to unite in a $6 billion "merger of equals." Combining these two companies will create a leading Williston Basin position with assets covering approximately 972,000 net acres, production of 167,800 boe/d, and an enhanced free cash flow generation that will generate capital returns to shareholders. A historic collapse in oil prices prompted both Whiting and Oasis oil companies to file for Chapter 11 bankruptcy protection in 2020. Thus, the merger can be viewed as a preventive measure to avoid going out of business.
In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.